Nevada became the first state to offer regulated real money gaming. It chose to launch with only poker. Delaware and New Jersey will add casino games banked by the house to their mix. This is a great idea for the bottom line of operators but it will come at the expense of poker players.
Online casino games will hurt poker players. Recreational players only have so much disposable income. If that money is lost in the casino then it can never enter the poker ecosystem. These negative expectation games can also be a temptation for some poker players. Operators will also be more motivated to promote online casino games over poker due to its higher return and lower amount of support necessary.
Importance of Casino Games for Bottom Line
Online casino games are often the highest revenue generating product for an interactive gaming company. For example, in the first half of 2013, online casino games were 51 percent of Playtech’s revenue. Its services department, that includes providing support for its licensees, was 29 percent of total revenue. On the other hand, poker was just 4.5 percent of total revenue. These numbers were taken from a company press release. Playtech owns iPoker, a network of sites that make up the second largest online poker room in the world.
Bwin.party owns the PartyPoker Network. It operates two brands on the network and licenses a handful of partners. Poker made up 18.1 percent of total revenue for bwin.party during the first half of 2013, according to a company press release. Poker is a higher percentage of revenue for bwin.party. The company operates most of its network sites as opposed to licensing skins like Playtech does. It also makes more money from sports betting, which is bwin’s primary business.
Challenges Unique to Poker
One challenge facing online poker rooms is liquidity. A pool of players with similar game interests must be available. These players must agree on what games to play for there to be action. If they cannot, the number of players available in the pool is irrelevant.
Launching an online poker room is far more complicated than it appears. Some might think it is as simple as adding every game of every limit imaginable. This is not the case. A new poker room needs to limit the games offered so that the small pool of players is not spread too thin. There must be increments between limits. Higher limit games that might bust poorly bankrolled players must be rolled out slowly.
There are also challenges in building a tournament schedule. Offering a new tournament every 5 minutes dilutes the player pool. Canceling dozens of tournaments a day due to a lack of interest can leave a bad impression on players. Events must be properly spaced out with reasonable buyins. Guarantee tournaments must be placed well within the schedule with reasonable prize pool expectations that will appeal to players but not force the poker room to cover substantial overlays.
Chips move between players every hand. That is the point of playing. This also allows cheaters and thieves to take advantage of it.
Two or more fraudsters can sit at a table and work as a team against unsuspecting players. A fraudulent deposit may be moved from one player to another through chip dumping. Player and observer chat can also change the outcome of a hand. These are reasons why poker requires an experienced security department. Security can become a major expense for a poker room.
Poker also requires unique promotions. A future USPoker article will cover ideas involved there.
Why Operators Prefer Casino Games
An online casino game does not require other participants to operate. Players generally play a video version of a casino game heads up. There is also no concern about players cheating at the game without hacking the system, which these days borderlines on impossible and would be detected. Casino players require far less support as there is little to investigate during a slot pull, video poker hand or roulette spin.
Players will also lose their money to the house faster at casino games than at poker. A hand of poker can take about one minute. A video poker hand, slot pull or roulette spin is over in just a few seconds.
A player betting $1 a spin on double zero roulette will theoretically lose about $.50 a minute, assuming a spin every six seconds. That is about five times higher than the rake paid by a $50 No Limit Texas Hold’em player.
There is no level of skill that can overcome the house advantage in most online casino games. On the other hand, skill is a contributing factor to a poker player’s success. Winning poker players can add expense to an operator through payment processing and also take money out of the system that may have been otherwise lost in the house games.
It is certainly within the rights of casinos to offer these games. These companies are in the business to make money off those willing to give action for entertainment. States that offer casino games will hopefully be able to strike a perfect balance that keeps the casino games from hurting the poker liquidity. Players are depending on it.